Monday, July 30, 2007

Gravitas Report

The past few months (actually 14 months in total) has seen some remarkably accurate market timing by Robert Taylor's Xyber9 methodology, which we affectionately refer to as Gravitas. Those of you who have read Taylor's novel, Paradigm, know where that name came from.

The following link will take you to an actual real time report trading these signals using the QLD, the 2X Beta fund of the Nasdaq 100, going long on Buys and short on Sells. Since June 1, 2007, the account, using only the Xyber9 signals, has appreciated from a beginning balance of $102,415 to a current, "mark-to-market" balance of $166,994. During this time there were 8 closed trades, six of which were winners and one Open trade which is up about $3,000.

The account is a "Paper Trade" account through Interactive Brokers. IB Paper Trade accounts are REAL accounts in every respect, except that the funds are imaginary. They accurately model slippage, commissions and the true availability of instruments at the instant of execution. Real money results would be very similar to the paper trade results.

Wondering if anyone can help me with this (I am new at options):Why would this contract fall in price by 0.20,QQQHU (strike at 47.00, premium 2.08)When the market is moving up and all other options with a similar strike eg:QQQHV (strike at 48.00, premium 1.31) gain in price (this one by 0.25)?I calculate the value of the first to be 49.08, and the latter to be 49.31, so in fact the previous option is cheaper yet it fell in price.Thanks.

I have tried all this with equivocal results. Problem is even Taylor says his short-term turns aren't all that accurate and can be influenced by market forces. He even changes dates and gives date windows, eg one or two days here or there. Try options and you will get your butt handed to you...like me.

I have traded Taylor picks and I agree with Allan - the leveraged funds are the best (QID, QLD, SSO, SDS). However it is not as easy as it looks. I would recommend paper trading for at least a month or two.

Options can kill you on premiums and the bid/call spreads. If you absolutely must trade options, however I would recommend QQQQs which go down to the penny.

I agree that trading options on QQQQ or SPY is very difficult. You've also have to be a day trader and be watching the market. Options don't have trailing stops nor one cancels the other like in futures. The spread widens and will cause 50% losses when the market turns against your direction. Like in the last two days for example. You've got to have more than just one timing service to fine tune the day / hour entry especially with options JMO from experience.

QID/QLD and stop losses is easier but I've not gone that way.

I bought the book and was sub'ed to Taylor's service free for one year when that offer was going but couldn't find the bucks to pay for the service when I was dropped. So I can verify Allan's trading claims but due to skill reasons I couldn't make a profit with options and I didn't try to drop back to a simpler instrument like QID/QLD. Allan's yet again shown me what I should have done, so I thank him again for great advice!

The following is offered only because it has been the missing link for me to start making money in this tough market.

FYI: market is up to 8/3 or 6, then possible crash down to 8/15. This corresponds to another tide timing service plus several other timing technologies (below). Watch out. Don't cut the 8/3 top tight by holding to 8/6. This market is in a topping action and subprime and hedgefunds going bust has the market nervous.

Just fyi, you might join and lurk at this free yahoo group for yet another timing source, sometimes to the hour. At least there's one fellow (Ian) who offers a service giving hourly turn points.

http://finance.groups.yahoo.com/group/TimeandCycles

Since using tide AND TimeandCycles, I've been making money. I completely back up what's said here about the worth of Taylor's service and agree it's the best timing service period, for cost reasons I don't sub to Taylors service but use a similar source but not as good of tide / gravity timing. Check out the files section for Georg. BTW sign up for individual emails to get the attachments. Browsing messages on the yahoo site will not see the attachments.

I have been following the system and have studied the back data. A few add on observations.

You really need to use the "system" and not try to day trade. For instance, last week I was short per the signal and did well, but closed out my profits too early. I then went long too early and took a small loss rather than letting this play out long. I think from my perspective you need to play enough $$ to make $$ but you need to keep your quantity low enough so that you can keep a very wide stop because one thing you will notice if you study the past trends is he is usually right but there are plenty of wiggles in between his start and end point that can shake you out before you make your money.

Also, I try to look at the charts to minimize risk. For instance, he had a turn date on the 20th and the night of the 19th the SPY was snuggled right up against a trend line. At that point it was scary to go short because it was strong but at the same time the risk was low since if it burst above the line that would have been a tell it was going the other way. Next day it gapped down and I was positive right from the go. When I went long last week there was no clear trend line or way to read the chart so in my mind it was riskier and I was uncomfortable right from the go.

Anyway, I personally think it works but agree you need to spend some time getting used to it and not getting shaken out as things go on in between his turn dates.

Another thing to note is that there are no stops that are on the back testing report. That would let the system do its thing, and allow for wide fluctuations. You'd have to be comfortable with the lack of stops though.

I disagree with last weeks gravitas long call for 8/3 high! Of course it's conjecture saying, had Bear Sterns not had their conf call Friday it would have finished up and probably a net gain for most in that leg. Regardless, read my long post above. I offered an opinion from the TimeandCycles yahoo group cycle timers that holding long into Friday the end point in Gravitas, is a high risk.

It's not a new trading technique to only trade the middle of a run, not including the end points, into the trade turn window. This was also my observation from Gravitas forcasts that the turn dates should NOT be held. Trade AFTER the trend confirms, exit 1 or 2 days BEFORE the turn date. I exited 12:10 Friday sharp, an intra day H forecast by Ian's service on TimeandCycles. The high was really Thurs Close which follows the above trading rules, wait for the confirm, exit 1-2 days before the turn end date.

Sorry that folks lost!

A reflex raily (may) happen or it may be a trap. The net trend is down into 8-13/15 per cycles mentioned on TimeandCycles, which include a tide forcaster but including cyclic calender methods and other cycle methods, that I've found to be net net the best intra day and daily timing site found, yet.

My plan is to forgo this reflex rally, and to sell the high probably Tues afternoon after Bernie disappoints. Or reality sets in that no one will rush in and save Bear Stearns and other hedgies and holders of CDO etc.

How's the current down trend going? This will be one of those weeks where Robert will use both last Friday and Monday to pick the highest spike possible, then this Friday to pick the lowest spike possible, and say that there was a downtrend. That's how the system works.

The mantra here is to find something that works, then trade it. That something is Trend Following using a proprietary version of an Average True Range trend line. You can see it embedded on all of the charts that I post. It’s a simple observational system, if prices are above the trend line then prices are in an uptrend and if prices are below the trend line, prices are in a down trend.

For some, the most challenging part is actually trading the system. That’s where I come in with my observations and analysis. The “music” is my feel for the markets, as I have been doing this for a long time, from my first 5 shares of General Motors circa the mid-1960’s, to my reading of The Elliott Wave Principle in 1982 and through my acquisition of Advanced GET in 1994, the year I gave up my law practice and moved to the beach to trade full time. I have never looked back.

My tools are simple, but powerful. This is the best of the lot and I make it available for a nominal monthly fee. Subscribers not only get my proprietary Trend Following Model, but they get me; access to me for questions and/or learning through private email exchanges. We have found something that works. Now we trade it.

Profile

Originally from Detroit, Michigan, I attended Mumford H.S. the University of Michigan (BA), Suffolk Law School in Boston (JD) and Emory Law in Atlanta (LLM-Taxation ). Thus, with way too much formal education, I opened up my own law practice in Atlanta and closed it down 15 years later, whereupon I moved to the beach, Kiawah Island SC, to trade for a living. I made a fortune in the great bull market of the nineties, than lost 80% of it back in the great bear market of 2000-2002.

The stock market crisis of 2007-2008 led me down yet another path, this time through the discovery of simple trend following algorithms. Not long after reading Trend Following by Michael Covel, a reader sent me a link to an article in TASC that in turn led me to an algorithm that turned all that I had ever learned about trading on its head. The outcome is represented in my proprietary Trend Following Trading Models and the evolution of how and why is documented posts starting in late 2009.

As for the personal stuff, the music, the poetry and the joys and angst of living the good life, well, my spirit tells it all in the words, images and ideas that come together through the aegis that is, AllAlan.blogspot.com

A note about the AllanTrends web site: Most commercial sites have pop-up windows appear when you click on them. The idea is to capture your email and begin a never-ending email campaign to sell you their product or service. The worse ones collect emails and sell them to email lists marketing companies.

THERE IS NO SUCH POP-UP WINDOW ON MY SITE. ANYONE CAN EXPLORE THE SITE FREELY AND ANONYMOUSLY. I EVEN MAINTAIN A FREE PUBLIC CHARTS SECTION THAT IS UPDATED EVERY WEEKEND WITH CURRENT CHARTS OF SPECIAL INTEREST.